â™¦ Yes, your boyfriend can assist as a co-borrower, as long as he does not have negative credit.
â™¦ Conventional financing will be better, if you have the 20% (min.) to put towards a down payment for 4 key reasons:
1) - This eliminates PMI (private mortgage insurance), so your payment will be lower.
2) - Conventional loans have a lower interest rate, since the risk is lower to the lender.
3) - Conventional financing is easier to qualify for given your scenario.
4) - If you are writing an offer and are approved for a Conv. loan, your offer will be accepted over an FHA Buyer's offer.
â™¦ Keep in mind you will also need to have closing costs of apx. 3% (although you can ask the seller to pay them in your offer)
â™¦ Another factor will be how much $$ you have in reserve, after you close escrow.
â™¦ Another factor will be how long you've been at your jobs.
Let's set up a time that's convenient for you and your boyfriend to meet with a local lender familiar with the best options for you and your particular situation. You'll come away knowing where you stand and how to best approach the home buying process. We even have a complimentary copy of "Your First Home: The Proven Path to Home Ownership" ~
â™¦ Drawn from the real-life experiences of hundreds of thousands of first-time home buyers, "Your First Home" provides proven, practical guidance on how to:
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~ Close on your new home and maintain it
~ You'll also learn about successful creative financing strategies and ways to overcome less-than-perfect credit.
I understand your frustration. I am a local lender in Westlake Village, Ca and have mad a 24 year career working with First Time Home Buyers. In order to use your boyfriends income for qualifing he will need a FICO score. I can help you make this happen. Wether it be FHA or conventional financing I think it would be best to look closer at your personal situation. Feel free to contact me anytime firstname.lastname@example.org
To me the issue comes down to down payment. If you are working with a small down, FHA will be your best bet. The minimum is 3.5%, the rates are surprisingly competitive and the Mortgage insurance is usually less than what you would get with a low down conventional loan.
If you have 20% down, you will likely use a conventional loan. There is no mortgage insurance requirement and rates are great.
Now, once you meet with a lender and all your details are examined, they may have better information for you. Best of luck.
Your boyfriend does have a credit score. In today's world, if you breathe, you have a credit score. Find out what his is. Then work on strengthening it. There's some advice below, and there's plenty more online. But he DOES have a credit score. (A loan officer can tell you what his scores are.)
Second, get an agreement in writing before any purchases on who owns what, and who's responsible for what. Kind of like a pre-nuptual agreement. If you want ownership to be 50/50, that's fine. Put it in writing. What if the two of you break up? Who gets the house? Or does it get sold. Who's responsible for the mortgage. He earns more; will he pay more? (If so, you see why it's important to specify percentage of ownership.) If your income goes up, should the amount you pay for the mortgage go up? Who pays for the utilities? GET IT IN WRITING.
Hope that helps.
Don't rush into things. Educate yourself first and feel comfortable in your knowledge before you look at homes. Looking at homes is very emotional, which is okay. But, have the the nitty gritty of finances worked out first, when your head is still cool!
As for which program is best for your circumstances; you're in tough situation because good credit alone does not a good applicant make. Nowadays the lenders scrutinize the complete financial profile of the borrower(s), and they verify all the information thoroughly. Moreover, if you have credit, but not sufficient trades, this could be cause for concern. Or if you have income but not enough proof of where that is coming from or the stability of the same, that could be cause for concern.
Conventional loans require more down payment; FHA has a few features that favor first time buyers, e.g., they'll start with a lower down payment (3.5% of the purchase price), and also scrutinize the house for important health and safety considerations. This also is a crux because a seller who isn't keen on "fixing" things, might see the FHA rules as contrary to his/her goal of a "no-hassle" sale.
The best you can do presently is to sit down with a knowledgeable loan agent, mortgage banker, etc., who can review your financial profile and make recommendations to get on track with what will work given your particulars.
If FHA results being the loan you qualify for, you won't regret getting into your new house with favorable financing in place -- a fixed loan, amortized over 30 years, at the best rates on the market in a long time, and with little money from you -- 3.5% of $100,000 is only $3,500! Not bad.
Of course there is much more to this than what my colleagues and I have shared, but it is a start. If you would like more information, please feel free to ask for it. Good luck!
Seller can contribute more on a FHA Loan â€“ Up to 6%
Borrower can obtain a gift from a relative â€“ Borrower can obtain 6% of the sale price from Nehemiah, Ameri-Dream, these are non-profit agencies approved for gift/down-payment assistant programs with FHA Loans
Conventional loans usually require a larger down payment. And, if you have less than perfect credit you may not qualify for many conventional loans and find yourself being offered loans with higher interest rates and/or fees than you expected. The best thing to do is compare the cost of the conventional loan to an FHA loan line-by-line. What are the fees, interest rate and mortgage insurance on each? How much down payment is required? For some borrowers, a conventional loan may be less expensive. For many others, it will be more expensive than FHA.
contact a local licensed mortgage originator for the answers...
very best regards...
The only option for you and your boyfriend is FHA. There is a program that allows for alternative credit items to be added to your boyfriends credit profile ie..rent and utilities. There can not be any negative credit items on your boyfriends credit and it's ok that he doesn't have a credit score.
I would like also like to point out when obtaining real estate loan info, it should be obtained from a real estate loan originator and not a Realtor. While Realtors are generally knowledgable in regards to real estate lending, they may not be up to date with all the new and upcoming laws, and ever changing program guidelines. I wish you the best in your pursuit of obtaining real estate financing and congrats on using Trulia to obtain answers on your questions, it's a wonderful tool.
A conventional loan and an FHA loan can both be great tools when you are in the market for a house. FHA loans can be a great source of savings for you as well as offering several other benefits. A conventional loan also has its advantages. The decision of whether to use an FHA loan or a conventional loan can sometimes be difficult. Here are a few benefits and drawbacks of each.
Conventional Loan Benefits
The big advantage of conventional loans is that they often do not come with the amount of stipulations that FHA loans do. For example, with FHA loans, if you refinance or sell your house, you will lose all of the money that you saved by going into it in the first place. Through prepayment penalties and other costs, it may actually cost you more. The rules and regulations are far less strict with conventional loans in many cases.
Conventional Loan Drawbacks
There are many things that would qualify as a drawback of a conventional loan. For one thing, it is much more difficult to qualify for a conventional loan. The bank is basing everything on your personal credit and guarantee. With an FHA loan, the government is standing behind the loan, so you are more likely to be approved. With conventional loans, you will be forced to qualify on your own merit.
FHA Loan Benefits
FHA loans have many benefits over conventional loans. For one thing, the down payment on the house will be much lower. The down payments are low enough that almost anyone can qualify. With conventional loans, you may need a lot of money in savings in order to make the down payment to get the house.
Another advantage of FHA loans is that you can secure a lower interest rate. Since the government is backing the loan for you, they will also provide you with a lower rate. Anytime you can secure a low interest rate, it is definitely to your advantage. You can save thousands of dollars over the life of your mortgage.
The approval process is also different for this type of loan. The FHA will approve more applications than a traditional lender. If you have questionable credit, you may be approved by the FHA when you would not be approved by a regular lender.
FHA loans also has more flexible repayment terms available. You can get a loan with a number of different repayment options and payment plans. Whether you want a 30-year fixed rate mortgage or a reverse mortgage, the FHA has options for you.
FHA Loan Drawbacks
The FHA is a government program and anytime you deal with government programs, you know that there will be some problems. You will have to go by their guidelines and regulations throughout the whole process. You will be saddled with prepayment penalties and other hassles that you may not be used to with a conventional mortgage lender.
Thank you to Mortgage 101
If you have less than 20% down, you will most likely have to buy PMI (Private Mortgage Insurance). I would also suggest saving as much down payment as possible.
If I were in your position, I would ask around and find the best Realtor in your area that specializes in "first time home buyers". They can be invaluable in this process. They will know all of the sharp lenders in the market.
Your boyfriend can improve his credit quickly through a couple of different methods. First he can open a secured line of credit at his bank or credit union. Use it and pay it off each month for a couple of months in a row. Also, lenders can use credit history from cell phone accounts and insurance if he is just lacking any credit history at all.
Planning for all of these steps before you actually begin looking at homes will make the whole home buying process much easier for you. It's great you are asking these questions now! All the best!
Great credit score. My compliments. I think you have been given some good advice but alot of agents
work with certain loan brokers that will be able to work wonders with the income and the FICO Score.
As for FHA or Conventional. It is really a personal choice, and it does depends on the price range
that you are looking it.
Just call me if you have any questions, I specialize in Oxnard having recently closed 3 homes in
the last month in Oxnard with first time homebuyers.
Good Luck Helena.
There are likely as many loan programs as you have questions. Our recommendation is to not limit your search for financing to your identified choices but to explore all options. But as previously noted, the major difference is "down payment" availability.
The first step in buying a home after getting your personal budget in order is collecting information on the various types of funding programs. The best way to accomplish this is to visit several loan specialists and begin collecting information.....and asking questions.
Your best course of action will materialize....just gather your information and give it time.....